The Cayman Islands’ financial services industry has hit out at what it calls “false claims” by a prominent US group claiming that the Caribbean jurisdiction is a harmful tax haven.

The island referred to a US business group, "Business and Investors against Tax Haven Abuse”, which it said recently claimed that low or no-tax jurisdictions hurt the US economy because they encourage tax evasion.

"The deliberate misrepresentation of lawful tax structuring as illegal tax evasion should be a source of real concern to the US Congress and the public it represents," Cayman Finance chairman Anthony Travers said in a statement.

The Cayman Islands, along with dozens of other international financial jurisdictions, has come under pressure from G20 governments in recent years to make it harder for alleged tax evaders to do business. In their defence, such jurisdictions argue that such governments, many of which face dire debt problems and levy high taxes, are trying to impose a form of economic protectionism. The Cato Institute, a Washington DC think tank, for example, has argued that such centres are good for global economic growth by making it harder for governments to impose high taxes.

In its statement, Cayman Finance said that the US group is endorsed by Senator Carl Levin (D-MI).  Levin was a co-author of the "Stop Tax Haven Abuse" bill, which was supplanted by disclosure legislation in what became the Hiring Incentives to Restore Employment ("HIRE") Act

"This mischaracterisation is not only grossly misleading in describing the proper function of the offshore financial centre and the benefits it confers on the United States, but forms a wholly unsound basis on which to formulate United States tax policy," Travers said.

Travers’ comments are produced in the form of an open letter to Levin.

“The International Monetary Fund and the Financial Action Task Force reports demonstrate that Cayman's all crimes anti-money laundering regime is amongst the very best in the world; Cayman's IOSCO membership ensures proactive regulator-to-regulator disclosure,” it says.

"These [US] claims promote the falsehood that US companies which rely on legitimate provisions of the US tax code are in some way engaged in tax evasion, which is illegal and completely off the table in the Cayman Islands. This particular falsehood completely misses the point that the US is the major recipient of the capital flows from of the Cayman Islands. That capital provides the liquidity that is essential to the recuperation and ongoing health of the US economy,” said Travers.